WWW arkcity.net

By FOSS FARRAR
Traveler Staff Writer

South Central Kansas Regional Medical Center plans to pay off a $1.3 million loan from the City of Arkansas City by the end of this year, hospital officials said today. The City of Arkansas City provided the loan two years ago to help the hospital begin work on building a new facility two miles north of town.

City Manager Curt Freeland said it was his understanding that the two-year loan would be paid off by Dec. 31.

The money to pay off the loan comes from the hospital's operating budget, said Pam Jackson, SCKRMC chief financial officer.

SCKRMC spent money on architect fees and preliminary work at the proposed new hospital site. About $400,000 of the city loan money wasn't spent, Jackson said.

The $1.3 million "bridge loan" was approved by the City in December 2003. At that time, the plan was for the hospital to pay it back when a $25 million Housing and Urban Development loan for building the new facility was approved. However, HUD turned down the hospital's loan application earlier this year.

The HUD loan application failed over a disagreement over what kind of hospital would be built. HUD said when it turned down the application that the proposed new hospital should be a critical access facility with restrictions on the type of care provided. That was unacceptable to SCKRMC officials who noted that Ark City long had had a full-service hospital.

Momentum on the new hospital project suffered another blow when SCKRMC chief executive officer Joe Jirinec recently announced his retirement. The hospital board approved the retirement plans two weeks ago.

Despite these events, SCKRMC officials insist that the new hospital project is far from dead.

"Momentum was down (since the loan application failed)," Clayton Pappan, SCKRMC marketing director, said today. "So things haven't moved as quickly as we had hoped. But we've been pursuing two main options." They are private financing and a loan from the U.S. Department of Agriculture.

But an investigation into a possible USDA loan by several hospital physicians and staff members has shown "it doesn't fit as well as what was hoped for," Pappan said.

The main problem is time lines, he said. The federal loan process is a drawn-out affair, as the hospital board found out during its two-year-long application for the HUD loan.

"Obviously, we can move faster with private financing," Pappan said. "We now are looking at two private companies and have redone the information we did for HUD."

Pappan said he preferred not to release the names of the finance companies until an agreement is reached.